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Shares of Rite Aid (NYSE:RAD) stock are bouncing higher on Friday, up about 5.5% at the moment. At today’s high, RAD stock was up roughly 23%. However, the big gains aren’t tied to just today.
In fact, Rite Aid stock has been roaring higher for the last few days.
If RAD stock is able to close higher on Friday, it will mark the stock’s sixth straight daily gain. Shares are currently up about 70% over the last three days and about the same for the week.
At today’s high, the stock was up almost 100%, while this week’s gains will stretch the stock’s weekly winning streak to three.
Lastly, the volume has been downright impressive this week. So far, the stock has changed hands more than 110 million times this week. Even though there’s still time left in Friday’s session, RAD stock’s weekly volume has already set a new record. The prior record came from December 2019, when the stock registered a weekly trading volume figure of 100.88 million.
That’s a mouthful of stats, but it highlights just how powerful this rally has been. So that begs the question, what’s the catalyst behind all of this?
A Short Squeeze Is Driving RAD Stock Higher
With the stock’s recent rally, the market capitalization has swelled to $165 million. We’re not seeing this kind of move in other convenience store stocks, yet RAD stock has been on fire.
Shares are running into the 200-day moving average near $3, but if it can clear this area, we could see a continued rally in the stock. Helping power this move is a short squeeze.
According to Fintel, Rite Aid stock has a short interest of about 23%. For the last few months, the stock’s short interest has been hovering consistently in the 25% to 30% range. While it’s down slightly from that range, it’s still enough to force a certain amount of short sellers to cover amid a robust rally.
With the exception of this week, Rite Aid stock has struggled quite a bit this year. Even with today’s rally, RAD stock is down about 19%. Before the current six-day win streak took form, RAD stock was down more than 50% for 2023.
As Dana Blankenhorn previously wrote for InvestorPlace, “Rite Aid has drifted slowly toward a likely bankruptcy. That accelerated after the Department of Justice filed suit in March concerning its over-prescription of opioids.”
He added that the company’s recent earnings results were nowhere near spectacular, highlighting that Rite Aid lost $306 million or $5.56 a share last quarter. Further, management expects to lose $650 million to $680 million for the year.
That said, we’ll see how much momentum the stock can maintain amid its ongoing short squeeze.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.